No easy answers in Apple-Samsung case

Three things became clear about Samsung's patent-infringement claim against Apple in Sydney's Federal Court today: it's not just about Apple; it's viciously complicated; and it won't be resolved anytime soon.

"If Samsung is right about this, Samsung could do this to anyone," said barrister Stephen Burley SC, representing Apple. The case is "therefore of industry-wide significance".

Samsung is asserting that any phone that connects to standard 3G networks would have to use two of its patents. "Apple can't avoid using those patents," said barrister Neil Young QC for Samsung, nor can "many others that are moderately up to date".

Indeed, Samsung's lawyers have called for Apple to hand over source code for the iPhone 4 and 3GS, in addition to the iPhone 4S code already provided.

"The same issues are raised in relation to several Apple devices, and we made clear the other day we are seeking the same relief," Samsung's lawyers said. "No different issues, as we understand it, would arise in relation to the other devices."

If Apple is found to be infringing upon Samsung's patents with the iPhone 4S, and it can be shown that the 4 and 3GS models use the same code, then Samsung would be able to claim significantly greater damages.

Samsung's lawyers said that the company has already licensed the patented technology to other players, including Nokia and Sony Ericsson, but that Apple "simply don't want to pay a licence fee of a kind which is standard in the industry." Apple did make a counter-offer, which Samsung rejected as being too low.

Apple says they don't need to license because there's no infringement. Whether that's the case or not is a complex question.

Just one aspect is that the iPhone 4S and some other Apple products use a Qualcomm chip for their 3G baseband functionality, and Qualcomm already pays a licensing fee to Samsung.

"The experts on both sides are PhDs," said Young. "This will not be easy patent law, and will involve, in our estimate, considerable time for hearing."

Another issue is the extent to which rules laid down by the European Telecommunications Standards Institute (ETSI) apply. ETSI sets the technical standards for 3G and other mobile networks in Europe. Both Apple and Samsung are members.

ETSI members have agreed that if they own patents that are essential to implementing a particular technical standard, then they must license the technology to other members under the so-called fair, reasonable and non-discriminatory (FRAND) rules.

Samsung claims that negotiation has now failed, and that FRAND doesn't provide a mechanism for anyone to assist parties who can't agree on a licensing fee — a situation that Justice Annabelle Bennett described as "quite extraordinary".

Apple disagreed. "We don't accept that there is no mechanism," Burley said.

In an attempt to resolve that matter, Justice Bennett asked why she couldn't simply hold what she informally called "a FRAND hearing" to determine whether a fair licence fee had been offered.

"I can decide what that is if no-one else can," she said.

"They [Apple] are marketing an infringing product; we want to stop them marketing that product," Samsung's lawyers replied.

Justice Bennett ordered the parties to provide a statement of agreed facts as to the operation of the ETSI and FRAND regimes.

That's the patent law case — at least the main issues. Then there's the competition law case.

Under section 133 of the Patents Act 1990, if a patent holder fails to license a technology on reasonable terms, and the refusal is found to contravene the Competition and Consumer Act 2010, then the court can order the grant of a compulsory licence.

As if all of that wasn't enough, if Samsung loses the case involving the three patents put forward so far, it has another four patents ready to bring to the table.

"There's enough complexity without adding the other four patents in," Justice Bennett said.

As the Federal Court adjourned at lunchtime today, it was left to Samsung and Apple to agree on a timeline to provide documents working towards a planned hearing starting 8 March 2012 in the hopes of completing the trial by the end of April. After that, other commitments prevent Justice Bennett from hearing the case until August.

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